Premium Bond Syndicate Agreement

G_M

Good grief! The OP asked a simple question - why the complications?

1) if each member buys £X bonds, and gives the bond numbers, these numbers can be written on the agreement. If they so wish each member can then look online each month to see if any of those numbers has won!

2) yes, a level of trust is required. NS&I will pay the prize to the bond-holder. The others have to trust he will share it out. But hey! The world is NOT populated exclusively with rip-off artists. Many neighbours, colleagues, family members, childhood friends etc actually DO trust each other!

3) the benefit of such a scheme, surely, lies in the big prizes. Yes, with the usual £50/£100 prizes
a) premium bonds are a poor investment and
b) a syndicate may increase the frequency of wins, but reduce the value, thus making no difference overall

But the chance of a £1 million win is increased with a syndicate (albeit still a very long shot). And if one syndicate member does hit the jackpot, they all benefit.

k12479

andybrock wrote: »

Surely just one agreement with something like:

The Members hereby agree to contribute money to a collective fund ("The Fund") which will be used to purchase premium bonds, and to share the proceeds or winnings from any such draws in accordance with the terms of this agreement.

No, what I mean is the application form and/or the associated T&C's between NS&I and the nominated individual will say, and will be signed as such, that the money belongs to that individual. Your collective agreement will contradict that. That sounds like a recipe for legal wranglings should anything go wrong.

opinions4u

A syndicate agreement will not escape IHT liability.

So while a bondholder could win £1m and share it with the syndicate members as agreed, if he croaks within seven years his estate will retain the IHT liability.

This could mean there being no assets left to divide between the inheriting family because HMRC end up being entitled to, in the worst scenario, everything left in the estate.

e.g. value of estate £325,000 and no premium bond win = nil IHT.

Die within 36 months of PB jackpot and the full £1m is added to the value of the estate which is now £1,325,000. Deduct the £325k IHT threshold and you're left with £1m. IHT liability at £400k is greater than the funds left in the estate which is now insolvent. HMRC get everything, your wife and kids get nothing.

This is a bad idea.

Freecall

G_M wrote: »

a syndicate may increase the frequency of wins, but reduce the value, thus making no difference overall

The difference would lie in the fact that a syndicate would tend to move individual winnings towards the mean stated return of the scheme.

If, for example, the entire PB investment universe joined the syndicate holding equal shares and taking equal proportions of the winnings then each would receive the scheme payout percentage. (which I think is currently 1.3%)

It would rather take the fun element out of it though!

:j

andybrock

G_M wrote: »

Good grief! The OP asked a simple question - why the complications?

1) if each member buys £X bonds, and gives the bond numbers, these numbers can be written on the agreement. If they so wish each member can then look online each month to see if any of those numbers has won!

2) yes, a level of trust is required. NS&I will pay the prize to the bond-holder. The others have to trust he will share it out. But hey! The world is NOT populated exclusively with rip-off artists. Many neighbours, colleagues, family members, childhood friends etc actually DO trust each other!

3) the benefit of such a scheme, surely, lies in the big prizes. Yes, with the usual £50/£100 prizes
a) premium bonds are a poor investment and
b) a syndicate may increase the frequency of wins, but reduce the value, thus making no difference overall

But the chance of a £1 million win is increased with a syndicate (albeit still a very long shot). And if one syndicate member does hit the jackpot, they all benefit.

Thanks GM,I thought it was a simple question too!!!
Got a few idea's together on this to form the agreement.
Appreciated.:cool:

andybrock

opinions4u wrote: »

A syndicate agreement will not escape IHT liability.

So while a bondholder could win £1m and share it with the syndicate members as agreed, if he croaks within seven years his estate will retain the IHT liability.

This could mean there being no assets left to divide between the inheriting family because HMRC end up being entitled to, in the worst scenario, everything left in the estate.

e.g. value of estate £325,000 and no premium bond win = nil IHT.

Die within 36 months of PB jackpot and the full £1m is added to the value of the estate which is now £1,325,000. Deduct the £325k IHT threshold and you're left with £1m. IHT liability at £400k is greater than the funds left in the estate which is now insolvent. HMRC get everything, your wife and kids get nothing.

This is a bad idea.

Isnt this the case?? :


The good news is that as long as a simple agreement is in existence (and drawn up before the big win!) any winnings by the syndicate are not chargeable to Inheritance Tax as part of the leader’s estate. The prior agreement can be verbal or written but we recommend that a written record is made.(It’s not necessary to lodge this with HMRC Trusts & Estates (formerly the Capital Taxes Office)

alanq

andybrock wrote: »

Isnt this the case?? :

I'd say no and this was the case:

k12479 wrote: »

...the application form and/or the associated T&C's between NS&I and the nominated individual will say, and will be signed as such, that the money belongs to that individual. Your collective agreement will contradict that. That sounds like a recipe for legal wranglings should anything go wrong.

opinions4u

andybrock wrote: »

Isnt this the case?? :

The good news is that as long as a simple agreement is in existence (and drawn up before the big win!) any winnings by the syndicate are not chargeable to Inheritance Tax as part of the leader’s estate. The prior agreement can be verbal or written but we recommend that a written record is made.(It’s not necessary to lodge this with HMRC Trusts & Estates (formerly the Capital Taxes Office)

I'd say not. Take legal advice before doing anything. The individual holder of the PBs is potentially creating a situation that would be beyond traumatic for his family.

Sampong

G_M wrote: »

Good grief! The OP asked a simple question - why the complications?

Because mathematically - there is no point to doing it. AFAIK you can post your opinions on here as long as they're not offensive so I thought I would point that out, even though the point I made doesn't seem to have been comprehended.

But if the OP still wants to proceed, then that is his/her choice.

It could be construed as a collective investment scheme though, so he/she might want to check that with the FSA ( as if it did turn out to be a collective investment scheme it would need to be regulated);

http://www.joelsonwilson.com/news/briefing-notes/collective-investment-schemes

Sampong

andybrock wrote: »

any winnings by the syndicate are not chargeable to Inheritance Tax as part of the leader’s estate

Unless they die within 7 years of the win.